The fourth P

This coming week I will talk at an interesting event, the Water Economics Forum, in Barcelona. I will briefly speak at a roundtable together with practitioners in water regulation from Portugal and the UK. Although I am no expert in water regulation, I plan to address some of the issues of governance in the regulation of water (as well as other network industries):

-The difficulties and challenges of regulation in a multilevel democracy (Spain being a decentralized country in the eurozone and the EU). Who should do what? Can we find room for an "independent regulator" or several of them? Strengths and weaknesses of each level in the case of the water industry in times of climate change and other challenges. Independent regulation is not a yes or no dimension and interacts in complementarity with other institutions. This complementarity is probably more important now than some years ago because of climate change and related challenges.

-The need to somehow involve the citizens in regulation, not in a radical democracy approach, but in ways that increase democratic quality. Akerlof would say that we need a better narrative, others would say we should incorporate a fourth P in PPP (for people or population). Otherwise the regulatory compact will be fragile and investment incentives will suffer. Mechanisms of resource allocation, including markets, must be embedded in a broader social compact, to have legitimacy and provide true long term incentives for investment.

-The reasons for the widespread lack of popularity of private ownership involvement in water, but at the same time its potential in terms of innovation and incentives: how to address these reasons and find a democratically accepted role for private ownership? In his last book, which I read in French ("L'Economie du Bien Comun"), Jean Tirole argued that the new role of the state in the economy did not include ownership. I am not so sure, or at least I am not sure that democratic polities are ready to accept it. But I hope I will have time to discuss that with Tirole himself, because he'll be at the event!